Turbulence in Washington jolted markets out of an extended period of calm Wednesday.

Stocks, the U.S. dollar and government bond yields slid as investors pulled back from bets on the swift passage of President Donald Trump's agenda. Wagers that his policies would boost growth and inflation have been unwinding for months, but those moves accelerated Wednesday.

In one of the clearest signs of waning investor confidence, a closely watched measure of the dollar's value was on track to give back its postelection gains. Stocks fell around the world, with major U.S. stock indexes heading for their biggest declines in months.

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The Dow Jones Industrial Average lost 310 points, or 1.5%, to 20670 and the S&P 500 fell 1.5%. The Nasdaq Composite lost 2.1%.

U.S. stocks remain close to record highs and few investors said they expect a major pullback, but many said they were increasingly worried about the implementation of proposed policies such as tax cuts, deregulation and infrastructure spending following a series of developments in Washington.

Some traders said Wednesday's selling was sparked by reports that President Donald Trump had allegedly asked then-FBI Director James Comey to back off the investigation of former national security adviser Michael Flynn, which prompted some congressional Republicans to call for further investigation. In a statement issued Tuesday evening, the White House denied the account.

"The bigger picture here is it puts another dent in the likelihood of getting a Congressional majority to pass Trump's agenda," said R.J. Grant, director of equity trading at KBW Inc.

Fund managers surveyed by Bank of America Merrill Lynch view a delay in U.S. corporate-tax overhauls as the fourth-biggest tail risk for markets, according to this month's survey.

In March, stocks pulled back as House Republicans stumbled in their efforts to pass a health-care bill, with investors saying it added to doubts that Mr. Trump would be able to push through tax cuts.

Financial adviser Ryan Wibberley said he has been taking a cautious approach to the stock market for the past several months. As his firm recruits new clients, he has been wary about putting that new money into stocks -- in part because major indexes are near records, but also because of what has been happening in Washington.

Tuesday night's revelations felt different, said Mr. Wibberley, chief executive of Gaithersburg, Md.-based CIC Wealth. "There's been smoke everywhere. This is the first time there's been fire."

He said he isn't making any quick shifts to his client portfolios, but he has identified what stocks he would like to purchase if stocks retreat to a certain level.

Wednesday's moves upended weeks of stability. The S&P 500 has closed with a daily percentage change of 0.5% or less for 15 straight sessions, the longest such streak since February 1969.

The ICE U.S. Dollar Index, which measures the dollar against a basket of six currencies, fell 0.5% and was on track for its lowest close since before the election.

Investors piled into assets they perceive as havens, sending gold up 1.9% to $1,259.30 an ounce, and the yield on the benchmark 10-year Treasury note down to 2.223%, according to Tradeweb, from 2.329% Tuesday. Yields fall as bond prices rise.

Among market sectors, bank stocks were hit hardest: Financials in the S&P 500 were down about 2.8%, with shares of Bank of America and Morgan Stanley falling roughly 5%.

Financials had one of the strongest runs in the wake of Mr. Trump's victory in November. Bank of America, for example, gained 30% between the election and the end of 2016, and was up another 8% between the start of the year and Mr. Trump's surprise firing of Mr. Comey last week.

Banks' initial postelection gains came on hopes that bank regulation would grow less strict, leading to greater returns of capital; a lighter tax burden; and stronger economic growth. The turmoil in Washington now calls that into question.

While political swings may trigger volatility in the short term, longer term they are unlikely to have a major effect on the U.S. stock market, said Kevin O'Nolan, multiasset portfolio manager at Fidelity International. "U.S. stocks trade off earnings, earnings are linked to growth, and I don't think it's going to have a meaningful impact on growth."